She Knows How to Play the Game

The startup revolution is as much about the democratization of capital as it is about the creation of new technologies. So why do women-led companies still receive only 4.6% of all venture funding?

By
Katharine Mieszkowski

One simple statistic both motivates and haunts Denise Brosseau: Of the roughly $35.4 billion that VCs invested during the first half of this year, Brosseau reports, only 4.6% went to companies that were led by women. Her personal definition of victory is the increase of that figure to 50%.

"Twenty years ago, the issue was how to get women into the debt markets, how to get basic loans to them without requiring their husbands to co-sign," Brosseau says. "Today, the issue is how to get women into the equity markets. That is one of the last frontiers."

The story of Silicon Valley over the past three decades has been as much about the democratization of capital as it has been about the creation of new technologies. The vast amounts of risk capital entrusted to entrepreneurs to create new companies and to invent new markets have fueled a frenzy of innovation that has reshaped the economy. But democracy for whom? Do men have some kind of monopoly on worthwhile business ideas? If not, what are the obstacles facing female entrepreneurs who are seeking better access to venture funding?

As CEO and cofounder of the Forum for Women Entrepreneurs (FWE), Brosseau, 41, heads a kind of nonprofit accelerator for women-led startups. Based in San Francisco, with chapters in Seattle, Los Angeles, and Denver/Boulder, the FWE serves high-tech and life-sciences companies that are seeking millions in order to get big fast. It is a well-rounded entrepreneurial community that includes first-time entrepreneurs, successful CEOs, venture capitalists, and service providers such as lawyers, who are willing to lend a hand now in hopes of winning business from those growth companies later. The FWE is a network of 1,100 members — men and women — that both demystifies the VC process and wires women into it.

"Venture-capital funding is like anything else," Brosseau says. "It's a system that you need to figure out. There are a series of networks that you need to be a part of in order to succeed. There's a process whereby companies get funded, and women have been out of that loop for a long, long time." To that challenge, Brosseau brings both the sense of mission of a committed activist and the pragmatism and agility of a natural-born entrepreneur. "VCs tend to fund people who they know, people who are connected into their network," she explains. "If women are not connected through a business-school classmate or through a buddy who they play basketball with, which is often how the guys are connected, then we just have to create new ways into the network. I can't change the underlying behavior. But I can change who VCs know."

Springing It, Winging It

One of the central vehicles for changing who venture capitalists know is Springboard 2000, a high-profile series of "venture forums" created by the National Women's Business Council in conjunction with the Center for Women & Enterprise and with Brosseau's FWE. The Springboard 2000 sessions showcase women-led startup companies that are seeking from $1 million to more than $25 million in financing from investors. In January, Brosseau kicked off the first such gathering at Oracle headquarters in Redwood City, California. About 350 attendees — 200 of whom were either corporate, angel, or VC investors — turned out to see what ideas the women entrepreneurs had to offer. Brosseau told the investors confidently: "We expect that you each will leave today with the intention of investing in a least one of our presenting companies."

Talk about underpromising and over-delivering: Within six months after the event, the 26 companies that were showcased that day had raised more than $185 million.

The mid-Atlantic Springboard 2000, which convened last July at America Online's headquarters, saw 44 pitches, with an extra half day devoted to entrepreneurs seeking early-stage seed funding to meet the demand by angel investors. In November, a third Springboard 2000 gathering was scheduled to take place at the Harvard Business School, and New York and Chicago are expected to be added to the roster for next year.

What makes Springboard 2000 different from countless other high-technology forums where venture capitalists size up business plans — besides that you'll see more than the same few token women onstage — is that the entrepreneurs receive extensive coaching to make the most of their minutes in front of investors. Experienced startup players train the recruits on crafting their market projections, refining their presentation skills, and even enhancing their sense of showmanship.

Indeed, it's at the intersection of networks of power and nuts-and-bolts entrepreneurial education where the FWE does much of its work. For three-and-a-half years, the forum has been offering its own boot camp for startups, called "the eSeries," where success is measured in millions of dollars raised. The program takes 15 to 20 "students," each of whom is starting an early-stage company. The entrepreneurs as a group choose which seminars they'd like to take over the three months: negotiating a term sheet, building an A-list board, determining your company's valuation, hiring talent, doing deals, and, above all, pitching your business plan. Classes are taught by top-tier VCs, attorneys, and CEOs — all of whom become contacts for the students after the classes end.

Over the long term, the students form a kind of cohort, an instant alumni network of other entrepreneurs at their same early stage, whom they draw upon as they travel the startup road. So much for the outmoded picture of the lone-wolf entrepreneur going it on his own. "You can be more successful if you collaborate," says Brosseau. Indeed, some 20 to 30 messages per day are distributed on the FWE email list, which helps the group members tap into one another's networks: Does anyone have any contacts at this company? Which PR firm is still taking on clients? What's the going rate for a director-level marketing person?

For all of FWE's emphasis on training and education, though, Brosseau says that her most basic message to first-time entrepreneurs is: "Be bold. I kiddingly say that I give chutzpah lessons. So much of this is about having the wherewithal and the confidence to believe that you can do it. Women tend to spend way too much time preparing instead of just winging it. And the fact is, we can succeed by just winging it. There are times when taking a leap is better for you than taking another course."

One FWE event that's all about winging it is a sort of entrepreneurial dating game called "Get Connected." In fact, it was originally called "Entrepreneur Match.com," until a dating service with a similar name objected. Contestants display their skills — marketing, finance, operations — with a colored dot on their name tag. Strangers form instant startups and then race to create out-there business ideas in just a few minutes, complete with a one-page summary. After the "companies" do their pitches, the winning groups get a dinner for four together. "If in 20 minutes they could come up with something that creative and could work that well together in a situation where they've never met, who knows what could happen over dinner?" asks Brosseau.

Starting Up the Startups

Denise Brosseau knows what startups need because she's exactly the kind of startup addict that she now helps get funded. "I have the bug," she grins. "I totally have the bug." She's gone full throttle on no fewer than five startup companies herself, including a computer consulting business that she ran in her spare time while she maintained a full-time senior-executive job at Broderbund Software.

At her first startup, a Washington, DC-based travel agency, where she was employee number two, she worked 16 to 18 hours a day, 7 days a week, for 7 months — with only 3 days off. "It was hell," she says now. At the age of 24, she ended up in a hospital, utterly stressed out, with a kidney stone. And that's not her only startup battle scar. At Friend Technologies, a Bay-area company, the staff went from 18 employees to 80, dropped to 25 employees, jumped back to 80, and then had a total meltdown — all in one year.

For the past seven years, however, Brosseau has focused her energies on helping other women entrepreneurs navigate the treacherous startup waters. The Forum for Women Entrepreneurs, which began in November 1993, grew out of a research project by Jennifer Gill Roberts, a business-school classmate of Brosseau's. The study analyzed why women entrepreneurs weren't getting funded. (Back then, women-led companies were receiving less than 2% of all venture-capital funding.) "She concluded that women needed more knowledge about the venture process," says Brosseau, "that they needed better and stronger networks with one another, and that they needed access to attorneys and accountants, as well as to investors, so that they could move their businesses to the next level."

Thus was born FWE. When the group reached 250 members in the summer of 1997, Brosseau wrote a business plan. Months later, when the group's membership reached 350, she quit her job to run the organization full time.

Brosseau concedes that progress thus far has been slow but steady: The percentage of VC funds to women-led companies has gone up from less than 2% of $4.9 billion, or $98 million, in 1993 to 4.6% of $35.4 billion, or $1.6 billion, in the first half of 2000. And she insists that the pipeline is now primed with women who have the experience required to make a huge impact. From 1998 until the first half of this year, for example, the percentage of venture-financed startups with a woman on the senior-management team jumped from 21% to 43%. The women on those teams will be in a good position to go for the CEO slot at their next startup.

"The VCs will tell you that they fund people with a track record, who they've heard of, or who work for companies that have done well," Brosseau says. "They fund people who have been funded before. I am about making sure that the pipeline is full, training people along the way, and getting that statistic up. We have given women the experience that VCs are looking for. There are more and more women starting and running bigger and bigger companies."

Katharine Mieszkowski (km@salon.com), a former senior writer for Fast Company, is a senior writer for Salon.com. Contact Denise Brosseau by email (denise@FWE.org).

Sidebar: Lessons For Loot

Denise Brosseau's primary role is that of entrepreneurial connector. She amasses the speakers and teachers, the coaches and mentors, so that women-led companies can get up to speed faster. "You don't wake up one day and know how to do this," she says. "You can learn it at the school of hard knocks, but I believe there is a better way to learn your lessons."

The first lesson that Brosseau teaches: VCs don't bet on desperate entrepreneurs. "VCs want to be a part of success. They want to be part of the avalanche of money that's going to wash over you." One entrepreneur told Brosseau that she was so tired of being turned down that she stopped feeling discouraged and started to get mad. Anger was more effective. In her next pitch meeting, she all but pounded her fist on the table as she explained her company. She got funded.

Brosseau's second lesson: While passion is good, greed is bad. She tries to rank the entrepreneurs she meets on what she jokingly calls the "greed dotcom" scale.

The third lesson: Do take "no" for an answer — then figure out how to change it to "yes." Entrepreneurial folklore holds that entrepreneurs never listen when they hear a "no." But Brosseau encourages FWE entrepreneurs to listen most carefully at that time. Why are investors saying no? When entrepreneurs are striking out with funders, part of her role is to help the entrepreneurs ask themselves the toughest question: "Am I fooling myself?" Maybe the first 100 people who said "no" were the wrong hundred people, or maybe your pitch is off.

A version of this article appeared in the December 2000 issue of Fast Company magazine.